FanDuel & Paddy Power Owner Buys Stars Group, Creating World’s Biggest Online Gambling Company

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Flutter buys stars group

This is a developing story and will be updated.

Deals in the online gambling space don’t get much bigger than this one.

Flutter Entertainment announced Wednesday it would acquire the Stars Group in a deal that would create the largest online gambling entity in the US.

Flutter is the company that owns Paddy Power Betfair and FanDuel. Stars Group owns PokerStars and Sky Bet.

The Stars & Flutter deal at a glance

It’s hard to undersell the size of the deal:

The deal should be complete sometime next year.

Breaking down the deal for the US

This tie-up has huge implications internationally. But the most interesting piece might be how it relates to the US market.

It creates what appears to be an absolute juggernaut in America; the deal instantly creates a sports betting entity that will seek to crush emerging US markets.

FanDuel Sportsbook is the early leader in sports betting in both New Jersey and Pennsylvania, the two biggest markets outside of Nevada with multiple online operators. The recently launched Fox Bet — a joint venture between Fox Sports and Stars — already had designs on becoming a major player as well.

Here’s Flutter CEO, Peter Jackson:

“The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with FOX Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s FOX Bet brands. We are committed to these two high quality brands to drive the growth of the Combined Group in the US.

What’s this mean for FanDuel and Fox Bet?

Both will continue to exist; they are both able to leverage distinct brands that have value in the US.

But FanDuel Group — Flutter’s US arm — will be combined with the Fox Bet/Stars joint venture to create a single group that will also operate on a single platform. It’s not clear which platform that will be, other than there won’t be two. But both brands will continue to exist and serve the US market.

The combined company also has access to sports betting in a combined 24 states, thanks to deals struck with Boyd Gaming and Penn National. Those are two regional casino operators that figure to hold the keys to access in many states.

Fox Sports originally had an option to buy up to 50% of Stars as part of the original Fox Bet joint venture. As part of this transaction, Fox can buy up to 18.5% of the new FanDuel Group in 2021.

It’s crazy how far FanDuel has come

A year and a half ago, FanDuel was pretty much just a daily fantasy sports site, as the acquisition by then-Paddy Power Betfair.

The acquisition started before the US sports betting ban was lifted by the US Supreme Court, so it was still bought on speculative ground in the US for its value beyond DFS.

Now, FanDuel is the biggest and best brand for sports betting, and is quite definitely the linchpin for Flutter’s and Stars’ aspirations in the US.

What’s this mean for everyone else in the US?

You were already behind, and now you are further behind.

Everyone else in the space in the US will struggle to keep up with the combined assets — and will — of the new Flutter/FanDuel Group in the US.

The continued best bet is DraftKings, which holds second place in the New Jersey market. It also holds access to a database that is larger than FanDuel’s nationwide. (DK claims 11 million users via DFS and sportsbook; FanDuel claims about eight million.)

There are plenty of other potential challengers waiting in the wings, but not have shown the willingness or ability to really compete in a truly meaningful way.

And that’s just a partial list of people looking to make in-roads in the US on sports.